2017 – 3rd Quarter Newsletter

Trading during the summer months is customarily slow, and the summer of 2017 proved no different. July kicked off the third quarter with equity markets enjoying noteworthy gains over their June closing values and the yield on long-term bonds changed very little from June as investors seemed to focus on surging equities.

Equities held their own in August, despite hurricanes that devastated several southern states causing extraordinary economic loss. Conflicts both at home and abroad certainly influenced investor sentiment. Clashes between protesters in Charlottesville, Virginia, and escalating tensions between the United States and North Korea dominated the news. Nevertheless, a late-month rally in August pushed equities ahead of their July values. The Dow and S&P 500 posted marginal gains, while the Nasdaq led the month ticking up 1.27%. Long-term bond prices rose, with the yield on 10-year Treasuries falling to 2.12%, or 17 basis points below July’s end-of-month yield.

Ultimately, investors saw the US benchmark indexes make impressive gains by the end of the third quarter. The Nasdaq posted gains of 5.79% for the third quarter with the Russell 2000 increasing 5.67%. The Dow followed suite with gains of 5.58% followed by the S&P 500 posting gains of 4.48% with bonds holding steady with a .85% return as measured by the Barclays Aggregate Bond index. The international equity markets also posted positive gains for the third quarter with the MSCI EAFE up 5.40% and the MSCI Emerging Market index up 7.89%.

When it comes to financial planning and investment management, we spend a great deal of time focusing on market risk. However, other risks lurk in our financial picture that can derail our best laid financial plans. The recent announcement of Equifax’s massive data breach, which involves the potential compromise of the personal data of 143 million consumers, including names, addresses, Social Security numbers, and birth dates, reminds us all too well that there are other risks besides the market that we need to focus our attention on. Once the initial shock of such a large scale risk is exposed, we now come to face the question, what should we do to protect ourselves now and going forward?

According to www.identitytheft.gov, which is the federal government’s one-stop resource for identity theft victims, you should find out if your information was exposed. To do so, visit Equifax’s website www. equifaxsecurity2017.com and click on the “Am I Impacted?” tab and enter your last name and the last six digits of your Social Security number. Your Social Security number is sensitive information, so make sure you are on a secure computer and an encrypted network connection any time you enter the information. Equifax’s website will tell you if you’ve been affected by this breach. Whether or not your information was exposed, U.S. consumers can get a year of free credit monitoring and other services provided by Equifax and you have until November 21, 2017 to enroll.

Initial news reports suggested that signing up for Equifax’s credit monitoring services would preclude consumers from participating in any future class action suits due to the data breach. However, since the data breach, Equifax has assured consumers that subscribing to their credit monitoring service will not preclude consumers from taking action due to the data breach and has removed all language suggesting such exclusion from their terms of service on their website.

If you are indeed listed as a potential impacted consumer, the fastest way to protect yourself from the Equifax data breach is to place a security freeze on your credit files at the big three credit reporting bureaus, Equifax (www.equifax. com), Experian (www.experian.com), and Transunion (www.transunion.com). You can do this by contacting each bureau either through their website or through their customer service number. If you place a freeze, you’ll have to lift the freeze before you apply for a new credit card or cell phone–or any service that requires a credit check.

If you decide not to place a credit freeze, at least consider placing a fraud alert. A fraud alert is different from a credit freeze. A credit freeze locks down your credit whereas a fraud alert allows creditors to get a copy of your credit report as long as they take steps to verify your identity. For example, if you provide a telephone number, the business must call you to verify whether you are the person making the credit request. Fraud alerts may be effective at stopping someone from opening new credit accounts in your name, but they may not prevent the misuse of your existing accounts. You still need to monitor all bank, credit card and insurance statements for fraudulent transactions. To initiate the fraud alert, you need to request the fraud alert at one of the big three credit bureaus, who will then pass it on to the other two. An alert lasts 90 days.

Here are some additional steps you might want to take according to identitytheft.com:

Continue to check your credit reports at www.annualcreditreport.com. You can order a free report from each of the three credit reporting agencies once a year.

Try to file your taxes early–before a scammer can. Tax Identity Theft happens when someone uses your Social Security number to get a tax refund or a job. Respond right away to letters from the IRS.

Don’t believe anyone who calls and says you’ll be arrested unless you pay for taxes or debt – even if they have part or all of your Social Security number, or they say they’re from the IRS.

Finally, the best way to avoid becoming the victim of a cybercrime is to stay one step ahead of the cybercriminals. Here are some extra precautions you can take before you go online:

Follow the 3-2-1 rule:

Have at least three copies of your data (this means a minimum of the original plus two backups)

Use at least two different formats (e.g., hard drive and cloud-based service)

Ensure that at least one backup copy is stored in a separate location (e.g., safe-deposit box)

Consider using two-step authentication. Two-step authentication, which involves using a text or email code along with your password, provides another layer of protection for your sensitive data.

Think twice before clicking. Beware of emails containing links or asking for personal information. Never click on a link in an email or text unless you know the sender and have a clear idea where the link will take you.

Be careful when you shop. When shopping online, look for the secure lock symbol in the address bar and the letters https: (as opposed to http:) in the URL. Avoid using public Wi-Fi networks for shopping, as they lack secure connections.

Equifax plans to notify people whose credit card information was exposed. If you receive a notice…

Contact your bank or credit card company to cancel your card and request a new one.

Review your transactions regularly. Make sure no one misused your card. If you find fraudulent charges, call the fraud department and get them removed.

If you have automatic payments set up, update them with your new card number.

If you, or anyone you know, have questions on identity protection, or would like to review your investment portfolio, please give us a call at 209-957-7413 or email us at info@financialdecisionsinc.com.

Tolen Teigen

Tolen is part owner of Financial Decisions and serves as the Chief Investment Officer and Chief Compliance Officer. In his current role, Tolen is responsible for overseeing the investment portfolios for individual and institutional clients and specializes in retirement planning, estate planning, and tax minimization strategies. In addition to these areas of expertise, he also oversees the firm’s compliance mandates.